4 Tips For Collecting Rent For Your Residential Property

If you own residential property, collecting rent is going to be one of your biggest responsibilities. While the last thing you probably want to do is deal with rent collecting, it is a big part of your job. Your tenants have signed a lease and agreed to pay their rent on time each month, so it is up to them to pay it. If they fail to do so, you will need to collect it from them or give them an eviction. Here are some tips for collecting rent and deciding what methods you will accept.

Choose a Method for Collection

In order to increase the amount of tenants who pay their rent on time, give them options. If you only accept checks and money orders for rent, you may notice that this limitation makes it more difficult for some tenants to pay the rent. Your tenants have different lifestyles and work different shifts, so it helps to give them options. Here are some common methods for collecting rent:

  1. In Person – The most obvious way to collect rent is in person. Offer you tenants options for paying rent in person, including allowing them to pay with a personal check, money order, or even a cashier's check. If you have tenants with a history of bounced checks, it is a good idea to no longer allow checks and require money orders instead. Let your tenants drop off their rent money to the office manager, but also have a secure drop box just in case the manager is not in.
  2. Online – Many property management companies are now providing tenants with the option of paying online. This is very convenient and lets tenants use their credit or debit card. You can also set it up where they can only use a debit card or online bank account, and not allow regular credit cards to be used. In addition, eChecks are a popular option for paying the rent online.
  3. By Mail – For some tenants, paying by mail is the preferred option. They might be away on a business trip or taking an extended vacation and are not able to bring the check in person. If they are somewhere without stable or secure Internet access, paying online might also not be an option. This is where the benefit of sending it by mail comes in.

Charge Late Fees

A good way to avoid having tenants pay their rent late every month is by charging a late fee. You will need to include this stipulation in the lease. When they sign the lease, they agree to pay a late fee when paying their rent. You can set the terms for the late fee. For example, you might charge a $25 late fee if the rent is not paid by the end of the day on the 1st of the month, or give them until the 3rd of the month before charging a $50 late fee. You can have the late fee added to the following month's rent or require them to pay the fee with the current rent amount. Tenants that don't want this extra charge will be more inclined to pay on time.

Have a Strict Rent Collection Policy

Tenants that know they can pay the rent late, with or without a fee, will get into the habit of doing so. To avoid this, create a strict rent collection policy and stick to it. If you have told your tenants they will receive a 3-day notice to pay the rent or vacate if their rent isn't paid by the end of the day on the 1st, give out those notices on the morning of the 2nd every single month, even on weekends. A tenant that gets one of these notices will know that you mean business and won't get into the habit of paying rent late. The same goes for your policy about evicting after a certain number of days without rent payment or after sending out a certain number of 3-day notices.

Communicate When the Rent is Late

If you have a tenant that has not yet paid the rent and it is after the 1st, keep in contact with them. Communication is key to collecting rent. There are certain things to ask when you are trying to collect rent from them. Don't be vague or let them give you vague answers. Be specific with the questions you ask. Ask them when they will make the rent payment, what method they will use, and ask them what amount they are paying. Also, let them know if they need to have the late fee with the rent. To learn more, contact a business like Wilson Management Group.